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Exploring Alternative Investment Fund Investments

management is growing in popularity. The goal is to spread out your investments over a variety of markets, goods, services, and other ventures you feel strongly about. Your wealth can be better protected with a well-diversified portfolio if the economy is disrupted by supersized inflation, market volatility, or other risky factors.

Enterslice is eager to expand your investment through our investment advisory service. The best options for diversification for high-net-worth individuals, institutions, and corporate clients are alternative investment funds. You can participate in this insightful exploration of alternative investment vehicles. For those who are interested in building wealth for a lasting legacy, our carefully chosen options across various asset classes offer a wide range of products, including Real Estate Funds, Hedge Funds, Private Equity, and Residential & Commercial Real Estate services.

What Is Alternative Investment Management?

The term alternative investment management refers to the deliberate strategic investments made by you, your registered investment advisor, or the fund sponsor in unusual or non-traditional assets that may provide you with a variety of tax and financial advantages that traditional products like stocks, bonds, and mutual funds do not. Investing in a variety of categories, such as venture capital, digital assets, commercial real estate single-assets & funds, hedge funds, and private equity, are some examples of these choices.

Hedge funds, private equity, real estate, and other tangible assets in your portfolio can help you expand your approach to investing beyond just stocks and bonds. These investments may be crucial for diversifying your portfolio, reducing volatility, or accelerating growth under the correct conditions.

We may suggest Alternative Investments and complex solutions for a variety of client demands based on your risk tolerance and liquidity needs due to our strategic ties with top managers. Additionally, we provide you with advice and insights via thorough due diligence, creative portfolio construction, and research analysis. Your portfolio manager is able to investigate potential approaches that align with your financial plan.

Types of Alternative Investment Funds

Explore the realm of AIFs, which can be broadly categorised into three groups

Category I

Funds classified as Category I primarily invest in infrastructure, start-ups and early-stage businesses, social initiatives, SMEs, and other industries deemed to be commercially or socially viable.

Category II

Funds that invest in debt funds of both public and unlisted firms, or funds of funds, which are a collection of several AIFs, or private equity (PE) funds, usually with an investment horizon of four to seven years.

Category III

This group includes funds with a short-term capital appreciation goal. Hedge funds and private investment in public equity funds (PIPE) are examples of this. High-net-worth individuals choose hedge funds due to their aggressive management style, which generates large returns by investing in both domestic and international markets.

Benefits of Putting Money Into Alternative Investment Funds

Below are the main benefits of putting money into Alternative Investment Funds

Diversification of Portfolios

It provides a distinctive portfolio diversification and asset allocation. Compared to most other investment vehicles, there is a greater variety of asset classes accessible for investment, and their performance is not influenced by stock market fluctuations. Consequently, fund managers have greater freedom when assembling a portfolio.

Be Aware of Volatility

The investments made in an AIF have little to nothing to do with the stock market. As a result, their returns are not affected by the ups and downs in the overall market. Additionally, unitholders do not have to put up with volatility in share price because AIFs do not deploy funds to publicly traded investments. Thus, among the greatest investment options for portfolio stabilisation are AIFs.

Fair Returns

AIFs can yield large returns since they have access to a wider range of investments. These funds, as opposed to many traditional products like debentures or bonds, are a better source of passive income because of their investment philosophy. Moreover, because there is less reliance on the stock market, there is also less likelihood of return volatility.

Growth Attributes of Alternative Investment Fund

One of the main benefits of AIFs in India is their potential for high yields, with returns ranging from 12% to 18% annually. Because of this, investors wishing to diversify their holdings and achieve above-average returns may find that AIFs are an appealing alternative.

Retail investors now have easier access to AIFs because of the SEBI's introduction of a framework for "small" AIFs in 2019, which require a minimum investment of INR 1 crore. Furthermore, with almost 60% of AUM in AIFs managed by foreign investment managers, AIFs have proven to be a desirable choice for overseas investors wishing to participate in the Indian market. Furthermore, it is anticipated that this pattern will hold true, with the Indian AIFs market expanding at a compound annual growth rate of 18.5% between 2020 and 2025.

This growth is attributed to the advantages of AIFs, which include

  • The advantages of AIFs, which include their capacity to invest in a variety of assets, from infrastructure and real estate to private equity and distressed assets, are responsible for this expansion. Investors who diversify their holdings may be able to reduce risk and increase returns.
  • Alternative investment funds can also present special investment opportunities, such as start-up businesses and alternative energy projects, that are not accessible in typical markets.
  • The transferability of alternative investment funds is yet another important benefit. Alternative investment funds offer investors more liquidity than traditional investments because they can be transferred from one investor to another. This can be especially helpful for investors who wish to sell their holdings before the fund's term expires.
  • Alternative investment fund regulations were enacted in 2012 by the Securities and Exchange Board of India (SEBI), which contributed to the development of a more accountable and transparent sector. Furthermore, the Alternative Investment Fund Managers Regulations, which were introduced in 2012, have given alternative investment funds in India more transparency and responsibility.
  • Alternative investment funds provide a great deal of flexibility in their structure and investment approaches. Alternative investment funds, in contrast to traditional investment vehicles, can take on a variety of investment strategies, including long-only, long-short, event-driven, and more. They can also be formed as trusts, limited liability partnerships, or companies. This flexibility makes alternative investment funds extremely customisable investment choices, enabling them to meet the unique requirements and risk tolerance of investors.

Portfolio Management Service

A portfolio management service, also known as non-discretionary or discretionary PMS, is a professionally managed service in which qualified and experienced portfolio managers manage the investor's investment portfolio.

The in-house research team of the management services assists in selecting investments by doing comprehensive research on every industry, sector, and company. The team also keeps a close eye on global events, macro and microeconomic outlooks, and investment selections. They strive to attain exceptional returns on their clients' investments while skilfully controlling risk, and they give their clients regular updates and performance reports.

PMS Vs AIF

Portfolio Management Services are specialised investing services that cater to investors' time commitments, expectations for returns, and risk tolerance. The investors receive a new bank account and a Demat account to house the shares, and they are quite customised.

In terms of comparability, PMS offers a little bit more liquidity, while alternative investment funds have significant capital requirements and lock-in durations. While PMS provides real-time tracking and optimisation of your assets, alternative investment fund provides superior flexibility and diversification in non-conventional securities. Given their high-risk reward ratios, investors can choose between them based on a number of factors, including tenure, liquidity, preferred securities, and investing goals.

You can select a fund scheme that complements your investing objectives now that you have a basic understanding of AIF investments. To make an informed choice, do extensive research on the fund's historical performance before investing.

Importance of Alternative Investment Fund Management Service

Portfolio management, investment oversight, customised risk management services, compliance and governance, and delegate oversight are just a few of the many services offered by the alternative investment fund management service. In particular, they can supervise and carry out the regulatory obligations placed on the investment manager by the regulator, including keeping an eye on investment limitations and risk tolerances that may be customised especially for the fund.

Additionally, on behalf of the investment manager, the company in charge of managing the alternative investment funds will handle the enormous volume of regulatory filings and quarterly reports that are required by the regulator. This can be quite time-consuming and resource-intensive for a company, but it also lessens the investment manager's total workload by eliminating some of the more labour-intensive administrative tasks.

How Alternative Investment Fund Management Strategies Help in Higher Returns?

An investor can target specific risk-return characteristics with the use of alternative investment fund strategies, which are potent financial instruments. The intention is to provide an alternative risk-return pattern to that of traditional investing, possibly even turning a profit while traditional markets or assets are losing value.

Investors must take into account fresh, dynamic opportunities in the current market climate to achieve their return goals. Selecting an alternative investment fund manager who possesses the committed investment skills necessary to produce returns in this complex and varied asset class is essential. The reasons how it helps are discussed below

Expertise - Our independent alternative investments teams' specialised experience and global access may be of service to our clients.

Procedure - Strategies are founded on a thorough grasp of international markets as well as validated basic and quantitative research.

Outcomes - Biggest alternative asset managers offer years of expertise in implementing cutting-edge strategies throughout market cycles.

Enterslice Services on Alternative Investment Fund Management Strategies

We manage and supervise alternative investment funds, such as hedge funds and private equity funds, as part of our alternative investment fund management services. Among the crucial services are the following

Compliance Service

By offering assistance with alternative investment funds' adherence to legal standards, we support investor protection and openness.

Risk management

Enterslice helps to ensure optimum return assurance and overall fund stability by minimising and controlling the risks associated with the investments.

Enhanced Performance

Through effective strategic planning and investment execution, our alternative investment fund management service contributes to the enhancement of the alternative investment fund investment's overall performance. You benefit in the greatest way possible from this.

Enterslice Alternative Investment Fund Management Service

Enterslice provides a comprehensive range of alternative investing options to eligible participants spanning many asset classes. Consult with our private wealth advisers or financial advisors to see how using an alternative investment fund strategy might bolster your portfolio. Enterslice has a wealth of experience in investment options and managing funds for infrastructure, real estate, private debt, and private equity. With our industry experts, we can guarantee seamless fund management strategy and investing process alignment and provide knowledge on intricate risk and compliance issues. To assist fund managers in realising their investment goals and providing value to their clients, we may offer a smooth one-stop-shop solution.

Frequently Asked Questions

A collection of investing methods known as alternative investment management includes leverage, investment concentration, and portfolio hedging, which are not typically included in conventional investment plans. Managers of alternative investments may be able to raise returns by using these strategies without necessarily raising projected volatility.

Strategies known as alternative investments could be used in addition to your typical fixed-income and equity investments. Hedge funds, private equity, and real estate are just a few of the many techniques that fall under the umbrella of "alternative investments" and can be used to help you achieve your financial objectives. Hedging, leverage, and investment concentration are a few of the more complex techniques that are frequently used in alternative investments.

To get knowledge about the fundamentals of alternative investments, you can consult a variety of sources. It is best to speak with a professional advisor to find out if they are right for you and how they can work into your overall investing plan. A qualified advisor can give you advice on whether alternative investments are appropriate for your circumstances, as well as insights on market viewpoints, investment strategies, and implementation procedures.

In general, the alternative investment fund management is in charge of making sure that every alternative investment fund it manages complies with the requirements of the Securities and Exchange Board of India. Generally speaking, an Alternative investment fund management service performs risk management and portfolio management.

Additional services that the alternative investment fund management may provide include oversight of valuation, compliance, governance, outsourcing, delegation oversight, and help in choosing service providers for investment managers. It is also in charge of the various regulatory filings needed in each jurisdiction where the alternative investment fund conducts business, as well as monitoring and managing the constantly shifting regulatory environment in which the funds operate.

 

Indian residents, non-residents (NRIs), and foreign nationals can invest in Alternative Investment Funds.

Investors in Alternative Investment Funds (AIFs) include foreign nationals, residents of India, and NRIs.

By providing access to a wider range of investments and strategies, alternatives can raise total return and improve a portfolio's risk and return profile.

Compared to conventional investment vehicles, alternative investments are more complicated. They frequently come with greater costs. Higher risk accompanies the possibility of a larger return, just like in any investment.

While the minimum investment amount for directors, staff, and fund managers is Rs. 25 lakh, the minimum investment limit for investors is Rs. 1 crore. Alternative investment funds have a three-year minimum lock-in duration.

For the same reason, their returns are substantially higher. An alternative investment fund provides investors with a way to pool their money and the freedom to participate in a variety of assets, including debt instruments, real estate, hedge funds, listed and unlisted equity shares, and derivatives. As a result, it carries more risk and yields higher returns than Mutual Funds.

In addition to performing oversight, risk management, compliance, governance, and delegation of oversight for investment managers and the Alternative Investment Funds (AIFs) it manages, the Alternative Investment Fund Manager guarantees adherence to the Securities and Exchange Board of India.

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